Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Retailing

Brookstone Plan Filed

Brookstone filed with the U.S. Bankruptcy Court a Chapter 11 Plan of Reorganization and related Disclosure Statement. According to the Disclosure Statement, “Brookstone commenced these Chapter 11 Cases with an agreement to sell the common stock of reorganized Brookstone Holdings Corp. (the ‘New Common Stock’) to SPB Acquisition LLC (‘SPB’ or the ‘Plan Sponsor’), an affiliate of Spencer Spirit Holdings, Inc., pursuant to a stock purchase agreement to be implemented under a chapter 11 plan of reorganization, subject to higher and better offers. To ensure that the value of the Debtors’ businesses is maximized, the Debtors will hold an auction for the New Common Stock (the ‘auction’), with SPB serving as the ‘stalking horse’ bidder, subject to the approval of the Bankruptcy Court. An ad hoc group (the ‘Ad Hoc Committee’) of holders of the Debtors’ 13% Second Lien Senior Secured Notes due 2014 (the ‘Second Lien Notes’) entered into a restructuring support agreement (the ‘Support Agreement’), whereby the Ad Hoc Committee agreed to support the SPA and the Plan....The SPA provides for SPB’s purchase of all the newly issued capital stock of Reorganized HolCo for aggregate consideration of $146,265,000, consisting of $120 million in cash, $7.5 million in notes, and the assumption of certain expressly enumerated liabilities (the ‘Purchase Price’), subject to the terms and condition contained therein. After extensive good faith and arm’s length negotiations, the Debtors entered into that certain Plan Sponsorship Agreement, dated April 3, 2014, by and among the Debtors and SPB (the ‘Plan Sponsorship Agreement’). The agreement is to consummate the Stock Purchase Agreement and shall take all other reasonable actions necessary to implement or consummate the transaction. The Debtors agree to, among other things: (1) commence the Chapter 11 case, prosecute the motion for postpetition financing, the Bidding Procedures Motion and the motion to assume the Support Agreement, file the Plan and the Disclosure Statement with the Bankruptcy Court; (2) support the Restructuring Transaction. A qualified bid is scheduled to be submitted on May 28, 2014.” The motion continues to explain, “In summary, SPB has agreed to sponsor a chapter 11 plan whereby SPB will acquire 100% of the newly issued shares of stock of Reorganized HoldCo in exchange for the Purchase Price, subject to the terms and conditions set forth in the SPA. The Prepetition Noteholders support the SPA and the transactions contemplated therein and in the Plan. To ensure that maximum value for the shares is achieved, notwithstanding the extensive pre-petition marketing efforts, the right to serve as plan sponsor will be market tested through a competitive auction process to be approved by the Court. To induce SPB to serve as a stalking horse for a plan sponsorship auction, the Debtors have agreed, subject to this Court’s approval of certain ‘bidder protections,’ including a break-up fee of $3.7 million and an expense reimbursement of $500,000. The proposal made by SPB, an affiliate of Spencer’s, is the highest and best offer received by the Debtors. Spencer’s, together with its affiliates, is a highly reputable, experienced and financially sound specialty retailer focused on providing a fun and engaging retail experience through two principal formats Spencer’s and Spirit. The sale of the shares to SPB, who will operate the Brookstone chain as a going concern, will preserve jobs for most of Brookstone’s full and part time employees. This acquisition will also preserve relationships with landlords and vendors and will rejuvenate the Debtors both financially and operationally.”

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